Australian home market’s first test of the year
It’s the first big auction day of 2024 as the gap between apartment and house values widens
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The Australian property market will undergo its first major test tomorrow when 1,700 capital city homes go under the hammer on the first significant auction day of the year. CoreLogic economist Kaytlin Ezzy said it will be the second biggest start to February on record behind 2022 when 1,779homes went to auction. In the country’s two biggest auction markets, there will be 608 auctions held in Melbourne and 591 in Sydney.
Ms Ezzy said auction clearance rates weakened to below-average levels toward the end of last year and tomorrow’s event would “help set the pace for the pre-Easter selling season and provide a timely test of buyer demand”.
She added: “This week’s results could help indicate whether the weaker selling condition seen towards the end of last year has persisted into 2023 or if sentiment has lifted with earlier expectations of rate cuts following [this week’s] inflation update.”
Australia’s median home value moved higher for the twelfth consecutive month in January, up 0.4 percent. This follows an 0.3 percent uplift in both November and December. However, price performance is mixed across the capital cities, with Perth once again delivering outstanding growth at 1.6 percent in January. CoreLogic research director, Tim Lawless explained: “The western capital continues to see housing demand outweigh supply, helping to push values 16.7 percent higher over the past 12 months. Despite that, housing prices remain relatively affordable compared with most capital cities, with the median dwelling value sitting just under $677,000.”
Adelaide home values lifted 1.1 percent in January, Brisbane prices rose by 1 percent and Sydney values moved up 0.2 percent. Conversely, Hobart home values fell 0.7 percent, Canberra prices dipped 0.2 percent and Melbourne declined by 0.1 percent.
Mr Lawless noted that house prices across Australia continued to rise faster than apartments. The price gap is now at a new record high of 45.2 percent. House values across the capital cities lifted by 0.5 percent in January, equivalent to about $4,800 in value, while apartments lifted 0.1 percent, or about $900 in value. “Since the commencement of the upswing, capital city house values have surged 11 percent higher while unit values are up 6.9 percent,” Mr Lawless said. “It seems that most Australians are willing to pay a higher premium than ever for a detached home.”
Sales volumes remain elevated, with CoreLogic estimating 115,241 dwellings were sold over the three months ending January, which was 11.9 percent higher than the same time last year. “Despite ongoing cost of living pressures, high interest rates, low consumer sentiment and affordability constraints, homes are still selling, Mr Lawless said. “Housing demand has been buoyed by high migration, but also tight rental markets that have probably incentivised renters to transition towards home ownership if they can afford to do so.”
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Strong population growth, major infrastructure spending and comparatively affordable property are expected to cement Melbourne’s position as Australia’s most attractive long-term real estate market.
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Melbourne is poised to become Australia’s largest city within the next decade, with strong population growth, infrastructure investment and relative affordability driving long-term property demand.
A new research report from Knight Frank argues the Victorian capital remains one of the country’s most compelling markets for investors, businesses and residents.
The report highlights the city’s rapidly expanding population, diverse economy and major infrastructure pipeline as key factors underpinning future property growth.
Knight Frank Managing Director Victoria, Dominic Long, said Melbourne’s fundamentals continue to position the city strongly for long-term investment.
“Melbourne continues to stand out as one of Australia’s most compelling real estate markets,” he said.
“It is Australia’s strongest long-term growth city with the fastest growing population, the most diversified economy, world-class liveability and the most affordable major market for office, industrial and residential property.”
Population growth driving demand
Melbourne’s population has grown at an average rate of 1.8 per cent per year since 2000, faster than any advanced global economy, according to the research.
In the year to June 2025 alone, the city added about 123,500 residents, the largest annual increase of any Australian capital.
Population growth is expected to remain one of the key drivers of demand across residential and commercial property markets, including housing, offices and logistics space.
The report forecasts Melbourne’s population will overtake Sydney’s by the 2030s, reinforcing its position as the country’s fastest-growing major city.
Office market offering value
Melbourne’s CBD office market is also attracting renewed attention from investors.
Prime office rents remain significantly lower than in competing cities, with CBD office space about 46 per cent cheaper than Sydney and around 13 per cent cheaper than Brisbane.
That relative affordability is expected to drive long-term demand from occupiers and investors seeking value in Australia’s largest office markets.
The city’s office sector is also showing signs of recovery, with effective rents rising in 2025 and demand increasing for high-quality buildings in premium locations.
Industrial market benefiting from scale
Melbourne’s industrial sector continues to expand, supported by strong population growth, e-commerce demand and the scale of the city’s logistics network.
The city already hosts the country’s largest industrial market, with about 34 million square metres of warehousing stock and significant land available for future development.
Industrial rents remain competitive compared with other capitals, while Melbourne’s port handles the largest container volumes in Australia, further supporting demand for logistics space.
Infrastructure pipeline supporting growth
More than $200 billion in transport infrastructure investment between 2014 and 2036 is also expected to reshape the city and support future property values.
Major projects include the Metro Tunnel, the West Gate Tunnel, the North-East Link and the Suburban Rail Loop, which together will improve connectivity across Melbourne and its growth corridors.
Knight Frank’s Head of Research & Consulting, Victoria, Dr Tony McGough, said these investments would play a key role in supporting the city’s economic expansion.
“Melbourne is Australia’s most economically diverse city and has delivered stable growth for more than two decades,” he said.
“With strong population growth, a highly educated workforce and unprecedented infrastructure investment, Melbourne is well placed to remain one of Australia’s most attractive long-term property markets.”
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